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Brums [2.3K]
3 years ago
11

The manager of the manufacturing unit of a company is responsible for the costs of the manufacturing unit. The president is in t

he process of deciding whether to evaluate the manager of the manufacturing unit by the average cost per unit or the variable cost per unit. Quality and timely delivery would be used in conjunction with the cost measure to reward the manager.
a. What problems are associated with using the average cost per unit as a performance measure?
b. What problems are associated with using the variable cost per unit as a performance measure?
Business
1 answer:
trasher [3.6K]3 years ago
6 0

Answer:

AC Problems : Incurred even at 0 output level, much varying & deviant from cash flows

VC Problems : Doesn't include fixed cost, incomplete expenditure, incomplete financial (accounting) statements.

Explanation:

Average Cost is the cost per unit off output.

Problems with AC as a performance measure :

  • It includes all (fixed & variable cost) average. So, including fixed cost, it is not zero even at zero output level.
  • It's variance analysis during production & cost phases is very complicated.
  • It's result are deviant as evident from cash flows.

Variable Cost is the cost incurred on variable factors of production.

Problems with VC as a performance measure :

  • It doesn't include fixed cost. So, it is not a correct measure of complete total expenditure.
  • Fixed costs are huge. No financial inclusion of them makes accounting information unreliable (for legal purposes)
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which of these line items appears on both the statement of stockholders' equity and the balance sheet?
Bad White [126]

Net income

What is net income?

Net income can either be added to retained earnings by the company or given as a dividend to ordinary stockholders. Net earnings and net profit are frequently used as synonyms for net income because profit and earnings are used interchangeably for income (depending on usage in the UK and the US as well). Net income is frequently substituted with the word income, but this is not preferred owing to potential ambiguity. Because net income is often located on the last line of a company's financial statement, it is colloquially known as the bottom line (a related term is top line, meaning revenue, which forms the first line of the account statement).

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5 0
1 year ago
Account Title Amount Account Title Amt Accounts Payable ---------------------- $ 204,975 Income Taxes Payable --------------- 78
Archy [21]

Answer:

          Stockholders Equity

Preferred Stock                375,000

Common Stock                562,500

Additional Paid-in Capital   81,900

Retained Earnings        <u>    306,000 </u>

Total Equity                    1,325,4‬00

Explanation:

We look into the list only for the equity accounts:

Which are the preferred stock, the common stock

and the additional paid-in caital.

We will also include the retained earnings account

All this accounts increase the equity, so we ujust need to add them together.

8 0
3 years ago
The ability to connect to the internet through a modem using the same wires that transmit cable television was an example of a _
joja [24]
Answer: Major innovation.

6 0
1 year ago
1. I Co. recently began production of a new product, an electric clock, which required the investment of
dlinn [17]

Answer:

I Co.

1. Desired profit = 10% of invested assets

= $3,200,000 x 10%

= $320,000

2a. Total Variable cost per unit

Variable costs Per unit :

Direct labor                                 $ 10

Direct materials                              6

Factory overhead                         $ 4

Variable Product Cost  ($20)

Administrative and selling           $ 5

Total Variable cost per unit     $25

b. Total fixed cost per unit

Total fixed cost per unit = $2,400,000/160,000 = $15

c. The selling price per unit

Sales / quantity = $7,520,000/160,000 = $47

Explanation:

Data:

Variable costs Per unit :

Direct labor                         $ 10

Direct materials                      6

Factory overhead                $ 4

Variable Product Cost      $20

Administrative and selling  $ 5

Total Variable cost per unit      $25

EA

Fixed costs:

Manufacturing                       $ 1,600,000

Administrative and selling          800,000

Total fixed costs                   $2,400,000

b) Cost-plus approach to product pricing:  This approach requires the addition of the direct materials, direct labor, and overhead costs

c) Required profit = 10% of invested assets

= $3,200,000 x 10%

= $320,000

d) Product cost:

Variable cost = $20 x 160,000 = $3,200,000

Fixed manufacturing costs          $1,600,000

Total production cost                  $4,800,000

Product cost per unit $4,800,000/160,000 = $30

e) Income Statement to determine Sales Revenue

Sales                           $7,520,000

Cost of goods sold

      ($30 x 160,000)     4,800,000

Gross profit                $2,720,000

Fixed Costs:

Manufacturing            $ 1,600,000

Administrative & selling  800,000

Profit                             $320,000

7 0
3 years ago
Dowd, Elgar, Frost, and Grant formed a general partnership. Their written partnership agreement provided that the profits would
goblinko [34]

Answer:

The answer is: Edgar will receive $37,000

Explanation:

  • Dowd's share of the company's losses is $80,000
  • Edgar's share of the company's losses is $60,000
  • Frost's share of the company's losses is $40,000
  • Grant's share of the company's losses is $20,000

But since Grant is not willing to give more money to the partnership to cover his losses, the $9,000 difference must be divided by the remaining three partners. So they will divide Grant's losses as follows:

  • Dowd's share of the Grant's losses is $3,600
  • Edgar's share of the Grant's losses is $2,700
  • Frost's share of the Grant's losses is $1,800

Then you add up all the losses the three remaining partners had:

  • Dowd' total losses $83,600
  • Edgar's total losses $62,700
  • Frost's total losses $21,800

So when the partnership was dissolved, Edgar should have received $100,000 (capital) - $62,700 (total losses) = $37,200

I selected answer A since they probably rounded down Edgar's share to $37,000 (nearest possible choice).

6 0
3 years ago
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